Expenditure qualifying for capital allowances but exceeding the £100,000 annual limit goes into a general pool for plant and machinery. You can claim 20% each year for these assets, based on the value of the pool at the start of the year plus any purchases during the year in excess of the AIA (with the exception of any assets that must go in the special rate pool for which you only claim 10% each year).
Note that the value of both the general pool and the special rate pool is
reduced each year by the WDAs, so if the assets in the pool remain
the same the annual WDA decreases. The pool is also reduced by the
value of any sale proceeds received on the disposal of assets.
If the value of your pool goes below £1,000 you can write off the residual balance against tax at the end of the next financial year so long as it starts on or after 1st April 2008. This sensible measure enables most small businesses to get rid of their old tax balances on fixed assets.
Integral/installed assets such as plumbing, electrical and lighting systems, heating and air conditioning systems, lifts and escalators qualify for a 10% WDA if they exceed the AIA. You are allowed to pick and choose which assets use up the AIA, so if you have any expenditure like this it is always best to use the AIA against them first in preference to other assets.
For 2009/10 only there is a 40% WDA on expenditure in excess of the
AIA. This excludes integral/installed assets, cars, long life assets or
leased assets.
Finally, if your accounting period straddles 1st April 2008 (or 6 th April 2008 for sole traders) you must calculate a hybrid WDA as the rate
was 25% before then. This should be done on a time-apportioned
basis.
